Discuss Similarities and Differences Between Futures Contracts and Forward Contracts

question 86

Essay

Discuss similarities and differences between futures contracts and forward contracts.

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Definitions:

Par Value

The nominal value of a bond, stock, or other security, as stated by the issuer upon issuance.

Discount

A reduction applied to the usual cost of goods, services, or invoices, often to encourage prompt payment or increase sales.

Preferred Stock

A type of stock that grants holders priority dividends, often with fixed rates, and preferential treatment in the event of liquidation over common stockholders.

Par Value

The face value of a bond or stock as stated by the issuer, which bears no relation to its market value.